Fundstrat founder Thomas Lee, better known to the cryptocurrency community as Tom Lee, has expressed his enthusiasm towards the swift recovery of the bitcoin price from its drop in the past week.
Recovery From Winklevoss Bitcoin ETF Rejection is Important
On July 27, upon the rejection of the Winklevoss bitcoin ETF by the U.S. Securities and Exchange Commission (SEC), the price of BTC fell from $8,300 to $7,800, by more than six percent in a three-hour period.
Within 12 hours after its drop, the bitcoin price recovered from $7,800 to $8,250 in a much shorter period. The surge in volume and demand for bitcoin on July 28 caused the price of BTC to increase by 5 percent within 50 minutes.
Lee stated that the ability of bitcoin to shrug off a major event and recover in price in a swift manner is a sign of a positive change in the cryptocurrency market. Initially, investors in the cryptocurrency market reacted prematurely to the disapproval of the Winklevoss bitcoin ETF, which is not the ETF the community has anticipated since mid-2018.
“It’s a sign of a positive change in crypto that bitcoin has essentially shrugged off the Winklevoss ETF rejection. If this took place in April-June (more bearish period), the crypto market would have seen a sizable sell-off. In short, affirming why technicals improving,” Lee said.
Since July 22, the price of BTC has increased from $7,200 to $8,300, peaking at $8,500 on July 25. Within a period of eight days, the price of BTC has surged by over 15 percent and maintained momentum, stability, and strong volume in the $8,200 region for five straight days, excluding the brief period on July 27 that led the price of BTC to drop by six percent temporarily.
Analysts have generally attributed the abrupt rise in the volume and price of BTC to the high anticipation of the cryptocurrency community towards the approval of the first bitcoin exchange-traded fund (ETF), which as major multi-asset brokerage firm eToro CEO Yoni Assia said, will be a monumental regulatory change initiated by the U.S. government.
“There are many existing alternatives for an ETF, I think having institutional demand flow through those is as important. ETF is simply a regulatory signal from the SEC it’s a valid asset class,” Assia explained.
The two bitcoin ETFs that are said to have the highest probability of approval does not include the Winklevoss bitcoin ETF but rather the ETFs filed by the VanEck-SolidX partnership and the Chicago Board Options Exchange (CBOE).
Analysts have explained that CBOE and VanEck, as two strictly regulated financial institutions that have worked closely with regulators for over four decades and have experience managing hundreds of ETFs in the U.S. stock market, have a higher chance of obtaining an approval for the first bitcoin ETF over commercial companies like the Winklevoss twins’ Gemini.
Hence, the abrupt movement of the cryptocurrency market on July 27 was an overreaction to a piece of news that had very little to do with the optimism surrounding the VanEck-SolidX and CBOE bitcoin ETFs.